hot week for initial public offerings was capped Friday with a strong showing by cybersecurity firm Rapid7, which popped 52% in its debut. Following a typical post-Fourth of July lull, the week’s seven IPOs tied for the third most this year, according to research firm Ipreo. And this coming week six IPOs are on tap to raise more than $1 billion total.
“It was an excellent week for IPOs,” said Scott Sweet, senior managing partner at research firm IPOboutique.com. “The biotech area continues to be white hot.”
ProNAi Therapeutics (NASDAQ:DNAI) was the week’s big winner, soaring 81% on its first day. ProNAi, which is developing drugs against cancer and other diseases, raised $138 million after pricing at 17. The stock fell 2.6% on Friday at 30.
Chiasma (NASDAQ:CHMA) rallied 25% on its first day, then traded flat on Friday. It develops oral orphan medicines, which treat rare diseases. The company raised $102 million with an upsized IPO that priced at 16, above the expected 13-to-15 range.
Health care accounts for 49 of the 112 IPOs this year, triple that of the No. 2 sector, technology, according to Renaissance Capital. Healthy takeover activity is helping to fuel medical IPOs, Sweet said. Auspex Pharmaceuticals came public in February 2014 and was bought by Teva Pharmaceutical Industries (NYSE:TEVA) for $3.2 billion in March.
Cybersecurity Stocks Hot
The Rapid7 (NASDAQ:RPD) IPO showed the strong interest in cybersecurity stocks. Rapid7 priced at an above-range 16 and raised $103 million.
It follows the September 2014 IPO of CyberArk Software (NASDAQ:CYBR), which is up 254% from its IPO price of 16. Qualys (NASDAQ:QLYS) is up 208% from its September 2012 IPO. Cybersecurity companies are showing strong growth in revenue, though not all are profitable.
Rapid7 reported Q1 revenue of $23.6 million, up 41%, the third straight quarter of accelerating growth. But it lost a net $7.7 million amid heavy sales and marketing spending. And the company signaled that near-term profits aren’t a concern.
“We’re investing heavily in solutions, services and talent to help our customers,” CEO Corey Thomas told IBD after Rapid7 stock began trading. “I believe in building a great, sustainable business that will be profitable when the time comes.”
Two other IPOs debuted Friday with less fanfare. Ooma (NYSE:OOMA) fell 16% to 10.82 after pricing at 13, below the range of 16 to 18, raising $65 million. Ooma provides Internet telecom services for homes and small businesses using a cloud-based platform.
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